Hong Kong-dollar deposits rise in October, Exchange Fund declines as months-long protests continue

Local currency deposits increased 0.4 per cent, or by HK$30 billion, to HK$6.91 trillion

The financial war chest used to defend Hong Kong’s dollar declined by 0.9 per cent to HK$4.188 trillion at the end of October, according to the HKMA

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October’s Hong Kong-dollar deposits increased 0.4 per cent, or by HK$30 billion, to HK$6.91 trillion (US$880 billion). Photo: Bloomberg

Published: 7:37pm, 29 Nov 2019Updated: 8:27pm, 29 Nov 2019

Hong Kong’s local currency deposits rose in October, but the city’s overall financial war chest declined as debt issued by the Hong Kong Monetary Authority (HKMA) fell during the month.

October’s Hong Kong-dollar deposits increased 0.4 per cent, or by HK$30 billion, to HK$6.91 trillion (US$880 billion) at authorised institutions in the city, according to data released by the HKMA.

The Exchange Fund, the war chest used to maintain the stability of the local currency, declined by 0.9 per cent, or HK$41 billion, to HK$4.188 trillion at the end of October. The fund had risen to a five-month high of HK$4.229 trillion at the end of September.

The decline in the Exchange Fund was driven by a HK$69.9 billion drop in Hong Kong-dollar assets because of a decrease in debt “issued, but not yet settled” during the month, the authority said.

Foreign currency assets in the fund rose by HK$28.9 billion in October, “mainly due to an increase in unsettled purchases of securities and income from foreign currency investments”, according to the HKMA.

The decline in Exchange Fund assets came as the city’s economy had been hit hard by five months of protests and civil unrest, with the local economy entering a “technical recession” in the third quarter. Retailers, hotels and restaurants have suffered the most as the amount of tourists, predominantly mainland visitors, has declined sharply, falling by 43.7 per cent in October.